Posted
by
timothy
on Thursday April 10, 2014 @05:12PM
from the conscionable-vs.-unconscionable dept.

curtwoodward (2147628) writes "Entrepreneurs in Massachusetts say the state's legal enforcement of non-competition agreements hurts innovation — if you're going to get sued by Big Company X, you're probably not going to leave for a startup in the same industry. But those contracts have powerful supporters, including EMC, which is by far the state's largest tech company. Gov. Deval Patrick is finally picking a side in the debate by introducing his own bill to outlaw non-competes and adopt trade-secrets protections instead. Just one catch: he's a lame duck, and will be out of office in January."

In the US too, for that matter... for those who aren't up on their history. Taking IP is beneficial for any industry up to the point where the local players have a lockhold on the IP. At that point, they tend to stagnate, and others taking their IP kills their business structure. This is the reason the US declared independence in the first place (the UK owned the shipping routes and the taxation structure).

Apple, of course, invented their UI all by themselves, right? Never took any ideas from Xerox. Nope.And Microsoft invented everything all by themselves, right? Never took anything from Apple or BSD or... Nope.And the entire movie industry isn't based on IP theft either. They never moved west to avoid Edison's patent lawyers. Nope.

And you've taken away the I-tag again! I don't know why I'm still coming back here...

Apple, of course, invented their UI all by themselves, right? Never took any ideas from Xerox. Nope.

Nope. They bought the rights from Xerox. Different thing entirely. Micorsoft and the movie industry, though - they wer another matter and have the lawsuits (and subsequent settlement in the case of Microsoft) to prove it.

I wish the Apple-haters around here would at least get their history straight. I'm not an Apple fanboy. However, I am a computer history fanboy and I wish the amateurs would at least not keep spreading misinformation.

Whether Apple paid for Xerox's ideas or not, the fact is, the flow of ideas from Xerox to Apple meant that the state of art moved forward. When Microsoft copied similar ideas to Apple, the state of art didn't stagnate either. Ideas flowed through many people and it didn't cause the industry to stagnate.

Whether Apple paid for Xerox's ideas or not, the fact is, the flow of ideas from Xerox to Apple meant that the state of art moved forward. When Microsoft copied similar ideas to Apple, the state of art didn't stagnate either.

Nice try, but the fact that you felt it necessary to deny being a fanboy, referred to others as "Apple-haters" and were factually incorrect (see jklovanc's reply) kinda suggests that you are and Apple fanboy after all.

> taking any kind of IP and running away with it, which would basically kill the industry

How do you get from 'taking IP' to 'killing the industry'?

The free flow of ideas and techniques is what drives technology and industry.

Correct, sort of. There is the concept of running away from intellectual property (say, you work on Coca-Cola, and you run away with patented/secret drink recipes and formulas, and go work with PepsiCo or make your own company. This is obviously stealing IP property. Non-compete agreements do nothing of the sort to prevent this, and there are already Federal and State laws to deal with such situations.

Has anyone ever seen a non-compete actually stop someone from moving to another company? Non-competes have never been successfully upheld unless the ex-employee has it as part of his/her severance package. If they give you a million dollars to go away, they might be able to stop you from working for a competitor for a while. If you are fired, no way no how.

+1. Non-competes are good for big established companies (like EMC) but bad for the state's economy. Innovation comes from people leaving heavy bureaucratic companies and exploiting opportunities. And of course they continue to work in the same field.

There is no way that any US government will do something that big established companies would not like. So what happens is that more and more successful start ups happen in places like California, and the industry moves.

Silicon Valley has a lot of unwritten "no poaching" roals in place. Apple and Google were recently sued over it. And the wholesale theft of IP was certainly a major factor in the development of Windows NT, which hired David Cutler and his team of 20 developers from DEC to help them create a much more stable OS. The result was the NT kernel, which ran better for quite some time on DEC's "Alpha" hardware than on Intel's avaailable hardware.

> Yes but those agreements are not the law. And they were illegal in any case.

My point there was that while Silicon Valley may have had state law interfering with non-compete agreements, at least some of the businesses there had another means of enforcing non-compete agreements: they had written and unwritten, though illegal, non-poaching agreements

In theory, you can join a startup and avoid the "non-poach" agreements. In practice, roughly 3 out of 4 startups fail, so it's quite risky.

There's a difference between "taking IP" and competing in the same industry, Unless you consider a person's skills and knowledge to be the intellectual property of an employer (in which case you may as well argue that every employee that leaves a job should be forcibly lobotomized)

The original intent was to encourage companies to invest in staff training with the knowledge that they wouldn't simply be helping competitors who then offer a slightly higher salary. There were also concerns over poaching of employees known to be working on research projects so that the other company could basically get free R&D. The problem is that it quickly became "we own your brain, you can't use it for anything else remotely related to what we do" and then finally "we own every thought you have at

Seems like it depends. If you're an Oracle DBA, then a non-compete won't really matter. Your unlikely to part of the development of something that unique in the industry your company is in. Signing a non-compete would be silly and pointless, but of course you probably have to sign one anyway because your company wants you to be more beholden to them. Depending on what area you live in it may or may not be easy to find a job at a company in a different industry.

If it's a choice between screwing a company and screwing a person, screw the company. (I don't buy the legal fiction that a company is a person)
Of course, if we can avoid screwing either, that's better.
Unashamedly anthropocentric.

Don't they stop employees from taking any kind of IP and running away with it, which would basically kill the industry?

That would be confidentiality agreements Non-competes are meant to prevent employees from leaving, and immediatly undercutting the employer.

As for why they're bad, I didn't find what I was looking for (a Texas software engineer sued for work before and after employment at a company), but one sample non-compete [texasnoncompetelaw.com] is more of a restraint-of-trade, requiring an employee to be unemployed for a pe

Don't they stop employees from taking any kind of IP and running away with it, which would basically kill the industry?

I'm pretty sure that theft of trade secrets, violation of copyrights and patents, etc. are already covered by their own bodies of regulation. It's already illegal to run away with anything approaching the implementation of anything, so non-competes are either redundant or are deliberately intended to extend the 'any kind of IP' to basically include any and all relevant job skills (including the ones they hired you for, which you obviously didn't even acquire through experience at that job), experience, vagu

Do you not realize what a non-compete says? If you work as (for example) as a network admin you cannot leave Company A and go work for ANY OTHER company anywhere as a network admin. If they were commonly enforced you would effectively need to change careers every time you changed jobs. Do you really not see a problem with that?

I started contracting as a server, network and AD admin with one company in 2000, changed to another in 2004, moved to a security company doing server and network administration in

You don't work in the tech industry I take it. I've yet to see a non-compete that offered three years of compensation (typical blackout period that I've seen).

Even if companies did offer three years of compensation, by the time you got to the end of that three years, you would be three years out of date and three years out of a job, and would be lucky to get a job for half of what you were getting paid previously. This is not fair to the employee either. The company would have to compensate you for the three years plus COLA, plus typical raises and bonuses that you got for three years and then continue to pay you at half that rate plus COLA, raises and bonuses for the remainder of your professional career. Or, perhaps they could take the quick way out and just offer you a one time cash settlement. $2 million ought to be reasonable for a typical $100,000 job.

Don't they stop employees from taking any kind of IP and running away with it, which would basically kill the industry?

You're confusing non-compete with a non-disclosure agreement. Non-competes are generally illegal/unenforceable and rarely upheld, unless the company you're coming from pays you to effectively remain out of the employment market for a period of time. Non disclosures are absolutely enforceable (and these are about taking IP from one company to your next), and is usually what gets former employees in trouble. I'm under an NDA from my last employer, and a non-solicitation through the first week of next month. I

Precisely. Non-competes effectively attempt to stop an employee from being able to use their skills & knowledge (not IP knowledge) with a competitor, which is a limitation of trade and usually unenforceable. Non-disclosure agreements typically bind an employee from taking or making use of trade secrets with a competitor.Example: non-compete might attempt to prevent a CRM Architect from doing any CRM work for a competitor. this is distinct from a CRM Architect taking custom solutions developed

They are akin to indentured servitude. Imagine, your salary has stagnated, there are 5 competing businesses in your area that are hiring at 20% more than you make now. Since your general knowledge of the industry would make you a prime candidate you could probably get a 25% raise.

Too bad you're effectively banned from even applying for those jobs. Sure, you're not technically indentured, you could apply somewhere where your industry knowledge is worthless and you could always become a waiter. Of course, if

Don't they stop employees from taking any kind of IP and running away with it, which would basically kill the industry?

No, it stops the "competing" company hiring employees of the other company. The standard employee contract in most companies typically includes a clause that everything the employee does on company time and hardware belongs to the company, and that if/when the employee leaves they acknowledge that the IP to all work performed or used by the employee stays with the company and cannot be taken, copied or used by the employee once they leave.

I fully support this. I work for EMC in Massachusetts. I think my non-compete clause as a regular engineer only comes into play if I take a significant ownership position in a competing company, but that pretty much eliminates any possibility of me doing a startup.

What I really want to see is the elimination of trade secret restrictions on employee salaries. Employees should be free to discuss their salaries. I'm sure they don't want a survey to show that engineers with similar experience have radically different salaries depending on immigration status (wild speculation on my part, but since I can't talk to my H1-B friends, wild speculation is all I have).

Coworkers discussing salaries is a federally protected right http://blogs.findlaw.com/free_... [findlaw.com]
Of course if you live in an at will work state you can get fired or anything or nothing so proceed at your discretion.

Then you're a fool. The catch is the "adopt trade-secrets protections."

I know from personal experience that an employer can turn effectively any montage of trivial business practices into a "trade secret" strong enough to crush a competitor that hires a former employee. When I mean crush I mean obliterate; they can sue your new employer or start-up out of existence and walk away with the trademarks and copyrights.

Unlike a most non-competes and all patents, trade secrets are not limited in time. Under a s

I had a fun exchange with one of our VPs as I was going over the terms of our exit agreement and what it meant for me to protect company IP. His summary was, "You can't use anything you did or learned here in another job," which is pretty weird phrasing.

Me: But the reason you want me is that I'm an expert in industry X. I've worked here for 10 years, so most of my most current expertise comes from working at this company.
Him: Nothing you learned here.
Me: I'm not talking about taking algorithms and

If his choices were to sign a non-compete or not be employed in the industry, that's not a real choice.

And violent coercion? Bullshit. If you violate a non-compete, who the hell do you think the company goes to for enforcement? We allow, and even expect, government to interfere with contracts all the time: either because they have no meaning without some third party to actually enforce them, or because some contracts are so reprehensible that we as a society do not allow them to be made. Do you believe that

I agree that under our present constitution there ought to be at least some limits on contracts to prevent de facto indentured servitude. But allow me to argue the other side for a moment to ensure your argument isn't rooted in fallacy:

If his choices were to sign a non-compete or not be employed in the industry, that's not a real choice.

Please be careful of falling into "no true Scotsman". One could always make ends meet by being employed in a different industry.

If you violate a non-compete, who the hell do you think the company goes to for enforcement? We allow, and even expect, government to interfere with contracts all the time: either because they have no meaning without some third party to actually enforce them

Under some libertarian ideologies, that's the whole reason a government exists: to enforce private contracts.

Do you believe that government should not interfere with a contract that, say, grants ownership of one human being to another?

Ex employee here, my lawyer pretty much laughed at the incredible reach of EMC's employment agreement, which effectively states that "If at any time, any point in the future, you publish an idea, which we believe you may have originally thought of while working for us, even though you never used it, wrote it down, or discussed it with anyone during your employment; you agree to immediately turn over all rights to said idea, including buying out the rights from any co-creators, at your own expense".

Like patent claims, they're overbroad and often unenforceable in their details. But spending the time and money to fight it in court is quite expensive, and out of the reach of most day to day technology workers. The result is to chill transfers to companies that are involved in even _vaguely_ related fields, not merely those who compete directly.

It seems like everyone has to sign these anymore, even me, and I often wonder how many companies bother to attempt enforcement of them for most employees.

Sure, there are high-profile "key employees" who have limited employment options outside of another company doing the same thing, and within an industry you'd be hard-pressed to hide your employment status. A TV news anchor isn't going to don a fake moustache and wig to read the TV news at a competing TV station and fool anyone.

I imagine that they only enforce as many as it takes to discourage the moderately discontent from leaving or shopping around. If they have you on theft of some specific trade secret, copyrighted implementation, patent, whatever, the noncompete would just be gravy on top of the raft of actual charges.

Effectively, the non-compete provides them with something similar to an 'option' in finance. They are under no obligation to sue you into the ground if you leave; but the fact that they could, weighted by the

In MA, precedent(s) was (were?) set for enforcing them for, as you mentioned, key employees. If you're the CTO of a company making, let say, algorithms to design perfect donuts, and you quick to go work for Dunkin Donut's secret research facility in Boston, they would enforce it there. If you're just the tech lead for one of their random development team, in theory the judge will take your side.

Fuck them. They're stupid. Who cares if morons do or do not have noncompetes. It's not like it matters since the people there are so stupid.

It's worth noting that the Mitt Romney who was elected in Massachusetts was a politician who the Mitt Romney that ran for president was bitterly opposed to on the majority of issues, and spent a fair amount of time overtly attacking, along with the filthy liberals who had elected him.

The fact that these were the same man suggests that Mitt Romney is some sort of mendacious fuckweasel whose relationship with the truth is so complicated at this point that he probably can't even lie properly anymore; but th

As a Massachusetts resident with a pretty clear memory of Romney's campaign, election, administration, and effective resignation, I feel pretty good about saying the OP has a reasonable point. I never had the slightest doubt that he was a lying scumbag, and I have nothing but contempt for the people who bought his ridiculous schtick. Frankly, the only thing he kept any promises on was that he told us from the get-go he wanted to gut the schools and destroy our public education system... thanks a shitload.

For those who worship the sanctity of contract, please remember one cannot legally contract slavery. And that is what long non-compete clauses amount to -- the inability to market your skills ties you to the employer. Trade secret protection is a very different thing used as a smoke-screen. Unequal barganing power and contracts of adhesion are further aggravations.

I thought conservative libertarians were supposed to support the "free market". The idea that if your employer is ripping you off then "it's a free country" and you can work elsewhere. Then they turn around and support things like non competes which if measured in "freedom units" would be much more tyrannical than a minimum wage or anti discrimination laws.

And spare me the "if you don't like it don't sign the contract" line of bs. If people were able to unionize there might be some way we could fight back a